The Rookie

If there's a crisis on Jack Lew's Treasury watch, buy gold.

Updated Feb. 15, 2013 12:01 a.m. ET

Introducing
Jack Lew
to the Senate Finance Committee on Wednesday, New York Democrat Chuck Schumer said the Treasury nominee has an "uncanny ability to delve into a subject" and "master it." Americans can only hope, because you wouldn't know it based on the little that Mr. Lew claims to have known about what happened during his tenure at
Citigroup
from 2006-2008.

Mr. Lew's confirmation hearing was a substance-free zone, including his own job history. He was a senior executive at the giant failing bank before and during the financial crisis, but over several hours Wednesday he gave the impression he was there mostly to cash a paycheck.

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And when
Orrin Hatch
(R., Utah) ticked off the problems that afflicted the two Citi divisions that Mr. Lew oversaw as chief operating officer, the nominee seemed to know less about them than Mr. Hatch. "I don't recall specific conversations" about any of several Citi-run hedge funds that were imploding at the time, said Mr. Lew. "I was aware there were funds that were in trouble."

Citigroup funds with high leverage crashed and burned, requiring a taxpayer bailout while sparking fierce debates at Citi over whether customers had been adequately informed. But the COO who oversaw legal affairs for some of these units says he formed no opinion.

ENLARGE

U.S. treasury secretary nominee Jacob "Jack" Lew
Bloomberg

Mr. Lew seems to have been equally disengaged about his own investments. He said he didn't know why the venture-capital fund in which he had invested was based in the Cayman Islands or whether its location had resulted in any tax benefits. He did aver that Congress could always have banned such tax shelters before he had invested in one.

As for other lessons, Mr. Lew said that his experience at the bank and at New York University, where he was the highest paid administrator before joining Citi, had "proven to me that working collaboratively to solve problems is a universal challenge." That's good, because based on his knowledge of finance, he's going to need a lot of collaboration.

Ohio Democrat
Sherrod Brown
tried to draw out Mr. Lew on one of the Senator's favorite subjects: The fact that too-big-to-fail banks can borrow at lower rates than small banks because of the implied government backing. Mr. Lew rambled before saying that he was "not familiar with the specific issue."

Mr. Brown then asked if the government should stop providing this subsidy to the giant banks. Mr. Lew avoided answering and then said that "I'm being a little hesitant" because he doesn't believe in intervening in the markets "on a regular basis." This is the man who will run the Financial Stability Oversight Council.

As for policy, Mr. Lew said that any tax reform must raise more net revenue and suggested that while the U.S. statutory corporate tax rate is high, the effective rate is "much lower." Ohio's
Rob Portman
had to instruct him that the U.S. effective rate is much higher than the developed country average.

The overall performance reinforced the view that Mr. Lew was chosen mainly for his experience as a political hammer for the White House. In his introduction of Mr. Lew, former Senator
Pete Domenici
recounted that former Treasury Secretary Robert Rubin had praised Mr. Lew as a quick study. Maybe Mr. Rubin can get an office at Treasury and help break the rookie in.

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